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  • Writer's pictureTom Firestone

Herring and Anti-Corruption

Herring Fishing Boat

What does herring fishing have to do with anti-corruption? A lot. If the U.S. Supreme Court agrees with a challenge brought by fishing companies against a doctrine requiring courts to defer to federal regulators, the floodgates could open to thousands of legal challenges by kleptocrats and others subject to sanctions.

 

This past January, the Supreme Court heard oral argument in two related cases, Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce which were filed by commercial fishing groups challenging a regulation of the National Marine Fisheries Service requiring fishing boat operators to pay for monitors who conduct federally mandated compliance reviews of fishing vessels. The cases put the viability of Chevron USA v. Natural Resources Defense Council, 467 U.S. 837 (1984), a Supreme Court decision requiring courts to defer to administrative agencies in interpreting ambiguous statutes, squarely at issue. As a leading expert on the Supreme Court wrote after the oral arguments “it seemed unlikely that …the Chevron doctrine will survive in its current form. A majority of the justices seemed ready to jettison the doctrine or at the very least significantly limit it.”[1]

 

The Treasury Department’s Office of Foreign Assets Control (OFAC) which implements sanctions imposed under the International Emergency Economic Powers Act (IEEPA) and the Global Magnitsky Act, among others, could be severely affected. Courts routinely rely on Chevron in adjudicating (and almost always, denying) challenges to OFAC decisions. As one court recently wrote “[a] review of a decision made by OFAC is extremely deferential because OFAC operates in an area at the intersection of national security, foreign policy, and administrative law. Indeed, OFAC is entitled to Chevron deference in its interpretations of IEEPA.”[2]

 

At least one federal court has already noted the potential impact of a Chevron reversal on sanctions litigation. According to OFAC, Delyan Peevski “is an oligarch who … has regularly engaged in corruption, using influence peddling and bribes to protect himself from public scrutiny and exert control over key institutions and sectors in Bulgarian society.”[3] When he filed suit in federal court challenging his Global Magnitsky Act designation, the government moved to dismiss, relying on Chevron. However, shortly after the oral arguments in Loper Bright and Relentless, the presiding judge, Tanya Chutkan (of January 6 case fame) noted what a reversal of Chevron could mean for his challenge and stayed the case pending the Supreme Court’s decision.

 

It is not clear what would replace Chevron, but one possible candidate is the Skidmore doctrine.[4] Unlike Chevron, Skidmore does not require courts to defer to federal agencies and instead requires them to assess agencies’ decisions in terms of thoroughness, validity of reasoning and consistency. The adoption of such a standard will make it much easier for litigants like Peevski to challenge their designations and harder for OFAC to impose and defend sanctions.





 

[4] Skidmore v. Swift & Co., 323 U.S. 134 (1944)

 

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